Here’s a process that will not only help you get started, but is one that you can use on a regular basis to evaluate your existing business model.
Place your lists in order, in the order of the lessons as they came to you. Then answer the following questions.
Your Target Market
- What client segments are you targeting? Are there any others that you could effectively target?
- Are you acquiring clients fast enough achieve your targeted growth rates?
- What are your client churn rates? Can they be reduced?
- Is your market saturated? What is the saturation point for the services you provide?
- Are there any growing market segments that you can effectively target?
- How quickly will competitors emulate your business model and target your niche?
Products and Services
- Do the services and products you offer closely align with the needs of your target market?
- Will the services and products you offer generate “word-of- mouth?”
- Do you receive client complaints on a regular basis?
- Are there substitute services and products available for your clients to switch to?
- Do your competitors offer competing or substitute services and products at a lower cost or with greater benefit?
- Can you increase revenues by converting any of your projects or services, such as audits or consulting engagements, into recurring engagements?
- Are there additional services or products you could offer in order to meet existing or future client needs?
Channels of Distribution
- What are the channels of communication between you and your clients? Between you and your prospects? Your “Suspects?”
- Do your channels integrate fully into your business model? Does communication flow through your practice in an orderly fashion?
- Are there methods of communication that would more accurately align with your target market segments?
- Is your communication relevant or irrelevant to your clients? Is your work product at the logical end of a chain of communication?
- Can your competitors “break” your communication channel?
- Are there any complementary or partner channels available that would enhance your communication?
- How strong are your client relationships? Are any of them in danger of deterioration?
- Are your relationship styles properly matched to the client expectations?
- Are there any things you can do to improve client relationships?
- Are the costs of switching from you to a competitor high or low? If they are low, is there anything you can do to increase the cost of switching?
- Have you established a client grading system? Have you evaluated and “fired” any clients that do not meet the needs of your business model?
- Have you evaluated increased automation? Can you easily scale your client relationships?
Fees and Margins
- Do you price your services and products at a level that clients are fully willing to pay?
- Do you collect your fees before you incur additional expenses? Are you able to manage your collections as a stable revenue stream?
- Does your pricing allow you to enjoy strong margins?
- Are your revenue streams diversified?
- Are your resource needs predictable? Can you schedule and deploy sufficient resources as needed?
- Are your assets and resources easy to duplicate? Or, do you have any intellectual property that offers protections?
- What would happen if there was an interruption in the supply of specific resources? What would happen if you lost a key staff member? Would it disrupt your operations?
- Are replacement resources available?
- Do you have untapped resources available?
- Are your key activities performed efficiently?
- Will competitors find your key activities difficult to replicate?
- Do you have a balance between in-house execution and outsourcing?
- Do you have contingency plans for a disruption of your key activities?
- Is there a chance that the delivery of your service might be disrupted?
- Can your activities be standardized? Are they under-used?
- Do you identify and develop partnerships inside and outside your firm?
- Are your relationships with your partners strong? Is there a possibility they might defect or work with competitors?
- Are you dependent on your partners?
- Are there untapped opportunities for outsourcing?
- Are there any affiliate or joint venture marketing opportunities with your partners?
- Will the addition of a partner improve your channels of delivery?
Your Cost Structure
- Are your costs predictable and manageable?
- Are your costs matched to your revenue?
- Does your cost structure scale efficiently?
- Will any of your costs grow faster than the revenue they produce? Are any of them unpredictable?
- Can you reduce costs?
Once you have gone through this analysis, you should have a good idea of either what your business model is, or what it should be.
Your next step will be to understand how to use this information in developing and planning your own strategy.
We’ll start on that in the next lesson.
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